Luxury real estate. We would all probably like a little luxury pad to jet away to during our holidays or at other times. Be it an ocean-view idyll, a grand estate, a French- or Swiss-style splendour or a Texas ranch retreat. All that's required are deep pockets for an outright property purchase or luxury rental.
On this note my interest in the luxury real state market was recently heightened during a visit to Christie’s auction house in London's South Kensington. It was here that I inquired about valuations on bronze busts by English sculptor John Somerville as I had one his works of Nobel Prize winning Irish novelist Samuel Beckett.
Aficionados of Somerville’s work will know that it appears regularly at Christie's and Sotheby's auction houses and his commissions include rock star bronzes (e.g. John Lennon, Mick Jagger, Jimi Hendrix, etc.) for the Hard Rock Cafe in London, New York and Los Angeles.
At Christie's I stumbled upon a glossy copy of 'Christie's International Real Estate' quarterly magazine subtitled 'The Global Address for Luxury Living'. This particular issue from late 2014 covered around 200 unique and exceptional luxury properties for sale - categorized from North America to South America, Europe to Africa as well as Asia to Oceania.
The prices ranged from around a mere $900,000 (c.€800,000) for an apartment in an exotic development in Lisbon, Portugal, through to a prime beachfront location in Naples, Collier County Florida, at $75m. Spoilt for choice really.
But even if - as a high-net worth individual (HNWI) or 'ultra' HNWI for that matter - you have a spare $5m-$10m to hand or sloshing around in a share portfolio for a property in say California, Rhode Island, Hawaii, South Carolina, Texas or even an Alpine retreat in Europe, would you want to buy another property when you've got a few in the portfolio already?
Perhaps. But then again possibly not and maybe you’ll be tempted to opt for a rental option at the luxury end of the spectrum. Reassuringly for the discerning traveller and HNWI’s prices in that section of the market don’t exactly come cheap - with an average booking usually starting from around £10,000 (c.$15,000) per week.
Luxury Real Estate Market
Looking at statistics on the luxury real estate market around the globe, a 30-page white paper titled ‘Luxury Defined 2015’ (An Insight Into The Luxury Residential Property Market) from Christie's International Real Estate (CIRE) to date, noted that more properties than ever were sold and listed for sale at $100m and above in 2014. And, ‘Trophy’ is the new buzzword in luxury real estate.
The document, which is CIRE’s third annual analysis of the global luxury residential market to date, revealed that the highest-priced home in London was sold for $98m during 2014. This would have bought 131 average-priced homes in the British capital, which last year topped the list of the world’s most luxurious real estate markets.
In other leading metro areas like New York and Hong Kong it was a similar and broadly buoyant picture, with the top sale in each city being $100m (equivalent to 54 average-priced homes) and $104m (worth 202 average-priced homes), respectively.
The world’s highest luxury property sold last year and listed in CIRE’s report was a $147m home in The Hamptons, east of New York City near Long Island. The ‘11962’ zip code that encompasses Sagaponack within the Southampton area of The Hamptons, has been listed as the most expensive in the US in 2015 by real estate Property Shark website, with an average home sale price a tad over $5m.
Global Luxury Rental Villa Market
Of course, rather than having all the hassle of buying a luxury property before even visiting a new country or territory, why not opt for a restful luxury retreat that you can book online with a provider that carefully tailors things to the exacting requirements of HNWI’s. The good news is that this niche of the market is now being catered for.
Edge Retreats an exclusive luxury villa and travel website with a concierge service that offers unprecedented access to the most stylish and private luxury villas, is one player providing this type of service. As a trend, digital luxury travel combined with bespoke concierge service is a space that is proving increasingly popular.
Somewhere on the edge of the celebrated destinations there are the retreats that only a select few know about. Now these discreet, premium villas are available online for those seeking that ultra-exclusive stay - but for a price. As well as offering weekly rentals from a starting point of £10,000, they also have some properties worth up to £250,000 (c.$375,000) a week available.
Luke McCormick, tech-entrepreneur, CEO and founder of Edge Retreats, which started out as a travel review website for uncovering stylish design hotels and villas, commenting on the firm’s market positioning explains: “We’ve created the curated hub for the world’s most exclusive luxury rental villas, all available to book online and backed by exceptional service and expert concierge.”
The London-based Australian, who previously worked for Secret Escapes, adds: “No one else is taking a truly global view of the luxury rental villa market, while offering a seamless online booking experience. Our customers expect to book luxury hotels online and villas should be no different, so we’re building the tools to make that a reality.”
Prime Properties: Prices
For prime properties in sought-after coastal areas in Europe, average weekly rentals of £30,000-£40,000 (c.$45,000-$60,000) are common through this operator, while very modern, fully staffed villas around Phuket’s ‘Millionaire’s Mile’ (Thailand) are available for around £20,000 (c.$30,000) in high season.
The average duration of stay is 10 days but McCormick reveals that it’s "not uncommon" for rentals of one month in some of the more popular areas. Equally he adds that it’s certainly not uncommon for additional services, such as private chefs, special events, sports cars, yachts and excursions “to be of equal or greater value than the villa itself.” It’s what makes for a luxury villa experience.
The firm, which McCormick reveals is experiencing robust growth since its launch and has witnessed a “doubling” in the second quarter (Q2) of 2015 versus Q1, recently secured VC-funding from Forward Partners. That growth is reflective of the wider industry.
Global Luxury Rentals Market Could Hit £15bn In 2016
Reflecting on some discernable trends since the business commenced in 2014 says: “We estimate the global luxury rentals market will be worth at least £15 billion (c.$22.5bn) in 2016 and with online travel sales growing at 12% annually we see plenty of room to grow.”
He adds: “We think the number of online bookings could rise to 40% by 2016, with 20% of those coming from mobile as customers become used to mobile transactions, particularly with the introduction of services such as Apple Pay.”
While Edge Retreats’ clients expect high levels of personal service, the Australian says they also “appreciate the ease of use of our site and the ability to book and confirm online.” Add to that they endeavour to find a luxury property/villa for clients if they do not already have it on their site - no matter where they want to travel to.
So, if one is looking for an ultra-exclusive villa anywhere in the world or particularly love the Cote d’Azur in France, Phuket and Koh Samui in Thailand, Bali, the Amalfi Coast in Italy, or the Caribbean (e.g. Antigua, Bahamas, British Virgin Islands), Edge Retreats offers some outstanding properties online that could fit the bill.
But it need not stop there as they offer properties in some 30 countries - from Abu Dhabi to Australia, Cambodia to Morocco, and from Oman to the US - with around 1,300 properties live on their site and new properties being added every day. One of their properties on Hamilton Island in Queensland, Australia - in the heart of the Great Barrier Reef - was voted the world’s best resort in 2012.
All the properties can be fully staffed with additional services organised if clients wish, or if they choose they can be left to themselves. Against the backdrop of 2014 seeing the highest number of online travel bookings ever (148.3m with 65% of same day hotel reservations made via a smartphone), International eXcellence magazine recently conducted a poll among HNWI’s.
Canvassing 223 respondents in the category the luxury magazine and website found that 83% would book a luxury villa over a hotel - if they received the same service and amenities as a 5 star hotel - but were the only guests. Clearly, privacy and unique location combined with a full luxury service such as chef, staff and concierge services were deciding factors. And, living like a local was highlighted as one of the key experiences sought.
Coastal Location vs. Countryside
When travelling abroad, 43% of renters booking a property via Edge Retreats choose a coastal location, while 28% opt for the countryside. McCormick notes: “We predict growth for turnkey properties in the Caribbean due to the introduction of golden visa programmes in places such as Antigua and Barbuda and the launch of new developments in the British Virgin Islands for example.”
Golden visas through investment in real estate or government bonds have also been introduced in Portugal and Cyprus for properties above a certain value. McCormick at Edge Retreats suggests that he sees this as “boosting demand for resort and retreat properties.” Other European countries including Spain, Malta and Greece are prominent too for property investment.
France: Strong Rental Yields
There will also be continued interest and “strong rental yields in France” - particularly the French Riviera - but also “increasing interest from China in vineyard properties” in the south west of the country according to McCormick.
Elsewhere, Italy has avoided oversupply and its key hotspots have remained resilient, while Montenegro’s favourable tax climate and plenty of recent inward investment, including new luxury resorts and developments, mean it’s likely to be “one to watch”.
Some leisure destinations reliant on international second-home buyers saw prices fall by more than a third in the downturn. Cities have seen growth in the past five years, but the Australian contends “it’s likely that getaway locations will show the best growth over the next five years”.
Many city markets are fully valued, so those looking for a return need to look at alternative real-estate markets. Currently, just under 30% of Ultra High Net Worth Individuals (UHNWI’s) own a rural retreat, 22% a waterfront property and 13% a ski chalet or apartment. At those sort of levels it’s not inconceivable that there could be further room for growth.
